U.S. sour crude sellers cut prices after China tariff, OPEC output increase - sources (updated)

GS Holdings

04/07/2018 09:38

* At least 10 mln bbls to land in Asia in Q3 - sources
    * Cargoes destined for South Korea, Japan, Malaysia, India
    * Sellers cut offers for Mars crude for Oct delivery 

 (Updates graphic)
    By Florence Tan and Jessica Jaganathan
    SINGAPORE, July 4 (Reuters) - Sellers of U.S. sour crude oil
have cut their offers for Asian buyers on concern that demand
may fall as China threatens to impose tariffs on oil from the
United States and Middle East supply may rise after major
producers agreed to increase output, multiple trade sources said
on Wednesday. 
    Chinese buyers plan to scale back their U.S. high-sulphur,
or sour, crude purchases after Beijing said last month it will
impose tariffs on U.S. energy products without specifying when
they would begin. The tariff decision is part of an escalating
trade dispute between the world's two biggest economies.
 urn:newsml:reuters.com:*:nL4N1TO1AI
    U.S. oil sellers "are worried about the trade war and they
panicked. China's buying has slowed as most of the refineries
are pending (purchases)," said one of the sources, a buyer with
a North Asian refiner.
    The price cut also follows Saudi Arabia's plan to raise its
sour crude output by 1 million barrels per day from May to July
to comply with the latest decision of the Organization of the
Petroleum Exporting Countries (OPEC) on June 22 to increase
production.
    An influx of cheaper U.S. sour crude may depress Asia's
demand for spot Middle East oil for a second month in July, when
September-loading cargoes trade, the sources said.
    Sellers are currently offering the U.S. sour crude grade
Mars to Asian buyers for delivery in October at $1 to $1.50 a
barrel above Dubai quotes on a cost-and-freight basis, on par
with Middle East sour crude Oman, the sources said. That is down
at least 50 cents a barrel from the Mars sale prices for
September delivery, they said.
    "Many traders are keen to offer U.S. crude to us. We plan to
buy if the price goes lower," said the North Asian refinery
source.
    Traders last month booked record volumes of U.S. crude for
loading in the third quarter when the arbitrage was open and the
influx is expected to replace supplies from the Middle East,
Russia and Africa.  urn:newsml:reuters.com:*:nL3N1SZ3C0
    At least 10 million barrels of U.S. Mars crude have been
sold to refiners in Japan, South Korea, Malaysia and India for
third quarter delivery, trade sources have estimated.
    South Korea's second largest refiner GS Caltex  GSCAL.UL 
has bought 4 million barrels of Mars crude in recent months, the
sources said.
    Japan's top refiner JXTG Nippon Corp  5020.T  and India's
Bharat Petroleum Corp  BPCL.NS  have also purchased U.S. sour
crude. Malaysia's Petroliam Nasional Bhd has also bought its
first ever U.S. oil cargo, 1 million barrels of Mars for its
Malacca refinery.  urn:newsml:reuters.com:*:nL4N1TZ3JF  urn:newsml:reuters.com:*:nL4N1U02I0

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U.S. oil exports to Asia    https://reut.rs/2IQKGQG
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 (Reporting by Florence Tan and Jessica Jaganathan in SINGAPORE
Additional reporting by Osamu Tsukimori in TOKYO, Meng Meng in
BEIJING and Devika Krishna Kumar in NEW YORK; Editing by
Christian Schmollinger)
 ((Florence.Tan@thomsonreuters.com; +65 6870 3497; Reuters
Messaging: florence.tan.thomsonreuters.com@reuters.net))